Beach Renegotiates Royalty Agreement With Exxon Mobil

Australia's Beach Energy Ltd. (BPT.AU) said Thursday that it has renegotiated a royalty agreement with Exxon Mobil Corp. (XOM) for two assets that will see it make an annual payment of at least A$40 million (US$41.6 million) over the first five years.

The agreement resolves claims of underpaid royalties between Beach's Delhi Petroleum unit and Exxon's Esso Australia Resources business.

The new agreement will be effective from July 1, 2011 through the end of 2030, Beach said in a statement. It includes a one-time payment in the first year of A$8 million.

In 2004, Delhi Petroleum entered a confidential royalty agreement as part of Esso Australia's sale of Delhi, which required Delhi to pay a percentage of revenue from certain products from its Cooper and Eromanga Basin assets. Beach bought Delhi in 2006.

Reg Nelson, Beach's managing director, said the renegotiated agreement benefits both companies and takes into account changes in eastern Australia's energy industry and markets, as well as the growth potential of Delhi's assets.

Delhi produces gas, ethane, crude oil and gas liquids from its Copper and Eromanga assets in eastern Australia. It has an interest in about 300 oil and gas fields.

-By Robb M. Stewart, Dow Jones Newswires; [phone]; [e-mail]